CHICAGO (October 4, 2006) -The Profit Sharing/401k Council of America has released its 49th Annual Survey of Profit Sharing and 401(k) Plans, which provides the most up-to-date information available on current practices and trends in profit sharing and 401(k) plans. PSCA's annual survey reports on the 2005 plan year experience of 1,106 plans with more than six million participants and more than $500 billion in plan assets. Plans represented in the survey are diverse, representing companies of all sizes and regions across the United States. The survey covers a wide variety of topics relevant to plan sponsors and the industry at large, including data on participation rates, catch-up contributions, company contributions, asset allocation, investment options, company stock, professional management, investment advice, automatic enrollment, and more. PSCA's annual surveys are frequently used by companies to provide benchmarks for their plans and by the government as a resource for public policy decisions. Below are some highlights from the survey: Employee Participation
77.7 percent of eligible employees have balances in their 401(k) plans. Pre-tax participant deferrals average 5.4 percent of pay for non-highly compensated workers (as defined by the ADP tests) and 6.9 percent of pay for highly compensated workers. Company Contributions
Company contributions average 4.7 percent of payroll. They are highest in profit sharing plans (9.4 percent of pay) and lowest in 401(k) plans (2.8 percent of pay). Numerous formulas are used to determine company contributions. In plans permitting participant contributions, the most common formula is a fixed match only, present in 31.9 percent of plans (including plans with safe harbor matches). The most common type of company contribution for profit sharing plans is a discretionary profit sharing contribution only, which is present in 74.5 percent of plans. For plans with fixed matches, the most common matches are $.50 per $1.00 up to the first 6 percent of pay (33.6 percent of plans), $1.00 per $1.00 up to the first 4 percent of pay (8.6 percent of plans) and $.50 per $1.00 up to the first 4 percent of pay (8.4 percent of plans). Catch-up Contribution
Catch-up contributions for participants aged 50 and older are permitted in 98.0 percent of plans. 27.9 percent of these plans offer a match on the catch-up contributions. The percentage of those making catch-up contributions ranged from 39.7 percent at the smallest companies to 9.9 percent at the largest. Investment Options
The number of funds offered to plan participants continues to increase. Plans offer an average of 19 funds for participant contributions, up from 18 funds in 2004 and 17 funds in 2003. The funds most commonly offered for participant contributions are actively managed domestic equity funds (80.0 percent of plans), actively managed international equity funds (74.8 percent of plans), indexed domestic equity funds (71.3 percent of plans), and balanced stock/bond funds (67.5 percent of plans). Asset Allocation
The typical plan has approximately 70 percent of assets invested in equities. Assets are most frequently invested in actively managed domestic equity funds (32.0 percent of assets), indexed domestic equity funds (9.7 percent), balanced stock/bond funds (9.2 percent), and stable value funds (8.9 percent). Self-Directed Accounts
Self directed brokerage windows are offered in 14.3 percent of plans, while open mutual fund windows are offered in 8.3 percent of plans. 0.6 percent of plan assets are invested through brokerage windows, and 1.3 percent of plan assets are invested through mutual fund windows. Automatic Enrollment
16.9 percent of respondents have automatic enrollment, up from 10.5 percent in 2004. Automatic enrollment is most common in large plans - 34.3 percent of plans with 5,000 or more participants report having automatic enrollment, while only 3.5 percent of plans with fewer than 50 participants have automatic enrollment. Vesting
Immediate vesting is present for matching contributions in 39.3 percent of plans and for non-matching contributions in 21.2 percent of plans. Among plans that do not have immediate vesting, graduated vesting tends to be the most common arrangement for all plan types. PSCA's 49th Annual Survey of Profit Sharing and 401(k) Plans is available for purchase for $325 for non-PSCA members and $125 for members. |